5 Questions to Consider When Opening a New Distribution Center
If your operation can string together several years or longer of success, at some point you will need to consider opening up a new warehouse or distribution center. It could be something as simple as an increase in demand that the current warehouse simply can’t keep up with. Or, a new warehouse could be needed to accommodate much larger, company-wide growth on a regional, national or even international level. And other times still, it could be that your old warehouse is simply too outdated to justify upgrading, and it makes more business sense to simply acquire a new space and start from scratch.
Whatever the reason may be, if you’re contemplating opening a brand-new distribution center or warehouse, there are five major questions you must keep in mind as you go through the selection process.
1. How much space will you need?
This may seem like a no-brainer, but available footprint is undoubtedly one of the first major features you need to lock down before you can effectively select a site that will facilitate your needs. The warehouse footprint itself is the driving factor of your entire floor layout and in turn effects what your new facility will ultimately be capable of.
What is the actual square footage available? What percentage of this space must be allotted to offices, inventory, and other processes (sortation, handling, packaging, shipping, etc.)? Is it possible to build up instead of out to make the most of the space? These are all the types of questions you should be asking yourself when thinking about available space.
Ultimately, space should be the initial driving factor in opening a new facility as it will directly influence what type of processes and systems you can incorporate successfully into your new facility design.
2. What is the warehouse “flow” you need to achieve?
Understanding the flow of your raw materials, product and orders is paramount to designing an effective layout for your new facility. It is critical that you are able to pinpoint what this flow looks like early on, so that you can make a well-informed decision on what kind of space you need.
For instance, where do inbound product or materials go when they enter your facility? Are they immediately put into storage or moved into production? Do you have a slotting strategy? Are you using the first-in/first-out method or something different? If it’s headed straight for production, how are you sorting it into the line? What’s your picking and packaging process? How does it ultimately end up shipped and out the door?
Opening a new warehouse or distribution center is a huge opportunity for improving your current operation’s efficiency. Spending time analyzing your current flow both to make sure you’re well aware of its requirements in regard to the new facility as well as identifying areas where it could improve is a must-do in this situation. The information you get from doing this will help you identify the right layout and technology for your new facility.
3. What is your inventory strategy?
Planning for seamless inventory accessibility is key in achieving peak efficiency, and as we all know, efficiency is King in supply chains . This is specifically referring to how your inventory will be accessed, handled and transported.
When you’re setting up a new warehouse or distribution center, you are in an excellent position to prime yourself for success by keeping a few of these questions in mind: Does your inventory need to be sorted into individual lots and batches? How are you handling your product most of the time? Pallet? Case? Tote? Individual units? Are you storing your inventory on a short-term or long-term basis? How do you plan on picking and processing orders?
These questions will help ensure that the inventory strategies in your new facility are up to par with what you need to achieve.
4. What exactly needs to be handled?
Locking down the exact specifications of your product is the first step to determining the most applicable and appropriate technologies and systems to implement in your new facility. In essence, what exactly needs handling? What are the properties of the product that would effect the questions you’ve answered above?
Things like size, weight, weight distribution and fragility are all critical pieces of information that you need to know inside and out to make effective decisions for selecting the right kind of solutions for your new facility. Knowing these product specifications will help you answer questions like:
Where is the product’s center of gravity, weight, width, height and length? How will this affect transfers, sorters, accumulation, packaging and labeling? How and where am I storing product? Do I have many product types and therefore need multiple storage options? Can all my product types be stored in one place?
5. How much needs to be handled?
This last question is arguably the most important, because it determines your maximum throughput and peak volume requirements. These two factors are what drives your operation’s bottom line, keeps your operation growing and hopefully will carry you into a position where you need to open even more facilities to accommodate for new growth.
You’ll need to determine your maximum throughput and peak volume benchmarks for both during peak season and on a daily basis. Both of these rates are how you will determine what technology you need to outfit your warehouse with to meet those targets.
One important thing to note here is that in addition to identifying your current throughput and peak volume requirements, you need to plan for the future and the throughput and peak volume you may need to achieve down the line. In the end, being forced to open a new warehouse every time the demand for your product increases can be costly in the long run. It’s much better to make sure the facility you design and the technology you equip it with today will help you handle the growth of tomorrow.
Are you ready to open a new warehouse? Give us a call, we can help.
Carter Control Systems has 40+ years of industry experience providing custom tailored warehouse solutions for the material handling industry. If you’re in the market to open up a new facility, we would love to chat with you and see if our solutions could work for you. If you’re interested, please reach out to Jason Noble at jasonnoble@cartercontrols.com or 301-698-9660 x250.
